WASHINGTON: European natural gas edged higher Tuesday, after earlier swinging between gains and losses, as the market continued to weigh the risk of potential supply disruptions and further sanctions imposed on Russia.
The European Union has so far been reluctant to ban gas exports from top supplier Russia. However, European Commission president Ursula von der Leyen said on Twitter that the bloc and its partners “will keep up the pressure on the Kremlin until it stops the invasion of Ukraine.”
Gas supplies from Russia through the direct Nord Stream link and the transit network of Ukraine, the two biggest routes for delivering the fuel to Europe, remained stable on Tuesday.
But flows to Germany via a smaller link, the Yamal-Europe pipeline crossing Belarus and Poland, stopped after maintaining relatively steady supply over the past week.
Flows on that route reversed their direction, with gas running from Germany to Poland instead, a development the market may see again late yesterday after Russian exporter Gazprom PJSC again decided against booking pipeline space at a day-ahead auction.
Russia’s invasion of its neighbour has roiled commodity markets from gas to grains. While prices have started to ease after an initial bout of volatility, traders remain on edge. Europe depends on Russia for more than a third of its gas supply.
Despite a flurry of talks between Moscow and Kyiv over the past few days, Russian President Vladimir Putin said Ukraine’s leadership was not being “serious” about resolving the conflict.
Meanwhile, Ukraine’s capital city is prepared to go into an extended curfew from as its mayor warned of dangerous times ahead, after shelling overnight.
The reverse of Yamal-Europe flows may mean an increase in withdrawals from gas storage sites in Germany, with many of the recent purchases used by Poland on that route coming from German stockpiles, consultant Inspired Energy Plc wrote in a note.
Meanwhile, forecasts for above-average temperatures across northern Europe next week and robust liquefied natural gas (LNG) imports into the region are now putting pressure on prices.
China resold several United States LNG shipments to Europe, a rare move by the world’s top buyer.
Russia’s Gazprom has also ramped up its daily exports to key foreign clients so far in March to the highest in seven months as buyers stock up amid lingering concerns about future supplies.
Dutch front-month gas, the European benchmark, closed 0.8% higher at €115.44 (RM531.75) per megawatt-hour after falling as much as 8.3% earlier. The United Kingdom equivalent contract advanced 1.3%.
Britain’s LNG flows declined amid planned maintenance at the Dragon LNG terminal in Wales.
German month-ahead power gained 3.3% to €254.59 (RM1,172) per megawatt-hour.
“Gas markets seemingly are slowly reducing the geopolitical risk premium in European prices as it becomes increasingly apparent that Russian flows are not likely to get interrupted in the near term,” said Ron Smith, an analyst at BCS Global Markets. — Bloomberg